SINGAPORE: Gold pared some early gains on Thursday as the dollar strengthened and markets awaited the outcome of a European Central Bank policy later in the day.
Accommodative monetary policies favor gold and equities because low interest rates encourage investors to opt for assets that do not rely on interest yields.
Some of the shine was taken off gold’s earlier move, which was driven by Chinese buying, as the US dollar edged higher, MKS PAMP Group trader Sam Laughlin said.
The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent at 98.006. A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
“The yellow metal will be looking toward support broadly between $1,265 - $1,267.90 (the 200-day moving average) for an extension to $1,277 to break above the 200-week moving average,” Laughlin said.
Spot gold was up 0.1 percent at $1,272.20 an ounce as of 0651 GMT. On Wednesday, it had hit its strongest since Oct.5 at $1,273.34.
US gold futures were up 0.2 percent at $1,271.80 an ounce.
“We’re looking for gold prices to rally further into the year-end. The market is waiting for the outcome of the (US)presidential elections in November and what the Fed is going to do in December,” said OCBC analyst Barnabas Gan.—Reuters
Gold rises in NY
NEW YORK: Gold rose to a two-week high on Wednesday, gaining for the third straight session and breaching the 200-day moving average amid uncertainty over the timing of a US interest rate increase and ahead of the final US presidential debate.
Spot gold was up 0.5 percent at $1,268.44 an ounce by 2:27 p.m. EDT (1827 GMT), after touching its highest since Oct. 5 at $1,273.34. US gold futures settled up 0.6 percent at $1,269.90.
Spot prices had fallen about 7 percent over the past three weeks, as markets re-priced the likelihood of a Federal Reserve rate increase in December.
“Technically, gold is well supported above $1,250 an ounce ... today’s push in the $1,270 area is a positive signal ahead of the US elections and the possible Fed rate hike in December,” ActivTrades chief analyst Carlo Alberto De Casa said.
The metal is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets.
“Since (Fed Chair) Janet Yellen’s speech last Friday, there is the growing view, which I think is the right view, that the Fed is going to move very slowly. The market has discounted a December rate hike,” said Bill O’Neill, co-founder of LOGIC Advisors. Spot silver was up 0.2 percent at $17.63 an ounce. Platinum rose 0.2 percent to $943 and palladium fell 0.3 percent to $636.50.—Reuters
